High gas prices lead to coal 'resurgence'

A gas price 10-year high has caused a “resurgence” in coal-fired power in the UK.

Research by Imperial College London (ICL) found power from coal increased from a historic low of 0.2GW during June and July to 2GW in the first week of September.

ICL said it became cheaper to generate electricity from coal than gas in late August, despite carbon pricing doubling the cost of using coal.

Wholesale gas prices have risen 40% since the start of the year and currently stand 14% above their previously quarterly-average peak in 2013, at around £65 per megawatt hour.

The switch to coal has resulted in a 15% increase in carbon emissions from electricity generation and Britain is producing an extra 1,000 tonnes of CO2 every hour, said ICL.

Dr Iain Staffell, who led the research, commissioned by Drax power station, said: “These coal plants are not running solely because they are needed to meet peak demand, but because gas prices have risen sharply and carbon prices have not kept up, making coal power stations more economic to run than gas-fired ones.

“Even though carbon prices now double the cost of generating electricity from coal, coal plants are consistently in the money at the moment, meaning they can generate power profitably all day and night.”

He added: “Unless Britain’s carbon price can once again make up the gap between coal and gas prices, we risk rolling back some of the world-leading gains made on cleaning up our electricity system.”

ICL said almost half of electricity in Britain came from gas, plus five-sixths of household heat, and diversifying into cleaner sources would “help insulate consumers and businesses from price spikes”.

Gas prices have been pushed up by factors including lack of transmission capacity, depleted stores of gas after the hot summer and a lack of wind power, said ICL.

The government has announced plans to phase out coal-fired power plants by 2025.